New Delhi, May 9: State-run ONGC's revenues are likely to be hit because of a slump in global oil prices despite an increase in crude production for the second consecutive year in 2015-16.

ONGC produced 22.37 million tonnes of crude in the financial year ended March 31, 2016, a notch higher than 22.26mt in the previous fiscal, a senior company official said.

"Most of our major fields are three to four decades old, where natural decline has set it. So the challenge before us is to arrest this by investing in enhanced and increased oil recovery schemes and bringing in newer deposits into production," he said.

The increase in production, however, is lower than the target for the fiscal. ONGC's production during April-March 2016 was 1.60 per cent lower than the target.

Officials said the shortfall in production was because of a delay in commencement of production in Mumbai High from the B127 cluster, lower production from cluster-7 & WO-16, delayed or less gain from Gamij field in Ahmedabad, less than anticipated production from Madanam field and closure of wells in Ramnad area because of less offtake.

The marginal increase in production is unlikely to push up revenues of the company as global crude prices have slumped significantly.

While the basket of crude India imports averaged $84.16 per barrel in 2014-15, it cost only $46.17 a barrel in fiscal 2015-16.

ONGC's profits slumped 64 per cent in the three months to December to Rs 1,286 crore from Rs 3,571 crore a year earlier - a second straight quarterly decline following a crash in oil prices.

During the nine-month period, profits declined by 16 per cent to Rs 11,588 crore from Rs 13,798 crore a year earlier.

ONGC used to produce more than three-fourth of the country's oil needs but that share has slipped down to 60 per cent now. ONGC had produced 26.05 million tonnes of crude in 2006-07, which dipped to 25.94mt in the following year. That year its share in the nation's oil production of 33.51mt was 75.7 per cent. ONGC's 22.37mt of output in 2015-16 is 60.5 per cent of the country's 36.95mt of production.

GSPC stake

The Gujarat State Petroleum Corp (GSPC) said on Monday it is in talks with ONGC to sell a stake in its gas block off the east coast, to revive the challenging deep water field.

The block, where the discovery of gas was announced in 2005, was to start commercial production in 2011 but difficulties in drilling 5,000 metres below the seabed pushed back the plan by about five years.

GSPC, which has already invested about $3.6 billion in exploring and building infrastructure around the block, now wants ONGC's help on funds and drilling expertise.